Question

Perform an internet search and answer the following question: What factors should be considered when determining whether to classify someone as an employee or as an independent contractor? What is the “economic reality” test? Would you prefer to be classified as an employee or as an independent contractor? Explain your choice.

Answer 1

When any person who is bind to do a certain activities basing on his contract with the form is called as an independent contractor. Independent contractor will never have ownership of doing an activity beyond his work requirements. Independent contractor will have the opportunity to cost and possibility of the losses to be taken care. Person who is a tax payer takes responsibility of the costs that are incurred can be considered as an independent contractor.

Independent contractor is always bind by a particular contract. So his rights will be limited to that extent only.

Employee can be self employed or employee of the organisation. Person who has responsiblityr of both profit and loss will be considered as self employed. Employee for the organisation will have ownership so that will make him to take decision thinking about the greater good of the place he will work. His rights will not be limited as he is a part of the organisation. Employee will always have benefits of the organisation as he is also a part of the organisation. He has to follow the KRA and code of conduct of the organisation. He can be removed any time as he is liable to them.

Economic reality test deals with the economic practice of the individual and tell us whether they are employee or independent contractor. I will most likely prefer to be an Independent contractor as we can live on our terms and conditions. We can cut a deal with the organisation depending on our requirements.

My choice is independent contractor.